I started developing my first technical indicator in 1997. I remember that year because my daughter was working with me at the time.
Well, “working” may be too strong a word…
She was only four. But she’d sit on my lap and stare at the computer screen with me. She always asked a lot of questions.
Explaining markets to a four-year old made me a better writer, I think. After all, she didn’t have any background in finance or economics. My answers had to be simple, or she was off to sing those annoying Barney the dinosaur songs.
Working with a four-year old also forced me to create clear signals — because by the time she was in kindergarten, she wanted to click through charts on her own. She liked telling me what I needed to buy and sell the next day.
The first buy signal I showed her was a simple black and white chart. She said I should add color to make the signals easier to see. We landed on green for buy, and red for sell.
Computer monitors weren’t as sharp back then. She needed to see an unambiguous color change to identify the signal. After trial and error, I found bar charts were easiest for her to work with. She didn’t get distracted by the shapes or curves.
With the bars, she was able to identify signals for the half-dozen markets we traded.
She’s all grown up now. And I’m a better programmer than I was 25 years ago.
But I still use the ideas that helped my four-year old understand trading, as you’ll soon see…
My latest indicator, the Greed Gauge, is at the bottom of the chart below.
This is a chart of the Invesco QQQ Trust (QQQ), an ETF that tracks the Nasdaq 100 Index. It includes the popular tech stocks that were crushed in the recent sell-off. At its low, QQQ was about 32% below its high.
(Click here to view larger image.)
Of course, the buy and sell signals are shown by red and green bars. I highlighted the chart to emphasize these signals.
As you can see, the Greed Gauge avoided the worst of the drawdown — while also providing a key buy signal just before the rally in March.
But what I really want to draw your attention to is that small green bar on the lower righthand corner.
If this was 1997, my daughter would be telling me to get ready to buy…
Because just last week, the Greed Gauge turned bullish on QQQ and other index ETFs.
Now, this doesn’t mean the bottom is in. Greed Gauge signals are designed to catch short-term market moves.
All this tells me is that QQQ is in for a bear market rally. If my Greed Gauge stays bullish, though, it just might be a bull market move…
Only time will tell. I’ll be watching this chart closely to see when to sell — or if the bear market is really through.
To get the full power of the Greed Gauge at your fingertips, be sure to tune in to my live event tonight at 8 p.m. ET.
It’s the most powerful timing tool I’ve developed in 25 years. And I owe the clarity of the signals to the preschooler who told me to add colors to my charts.
Michael Carr, CMT, CFTe
Editor, True Options Masters
Chart of the Day:
Did Greed Gauge Call the Bitcoin Bottom?
By Mike Merson, Managing Editor, True Options Masters
(Click here to view larger image.)
Today on the bitcoin chart, a shred of hope.
While bitcoin prices were plumbing the depths below $30k this past week, all hope seemed lost for a new bull market coming along anytime soon.
Yet, Mike’s Greed Gauge was quietly flashing a major buy signal…
And even as the price of bitcoin tread water, the Greed Gauge continued to build, and build, and build…
Until it finally culminated in the price action we saw yesterday, with bitcoin breaking its short-term downtrend and potentially shifting momentum back to bullish.
At the very least, the Greed Gauge predicted yet another bear market rally for us to profit on. At most, it may have called the bitcoin bottom.
Either way, mere words are not enough to describe just how exciting Mike’s Greed Gauge is.
So I won’t just use words. I’ll use numbers…
Mike’s Greed Gauge has profited in 7 of the last 9 market downturns…
Tripling the S&P 500 over the last two decades…
With triple-digit gains of 139%… 143%… 228%… even 775% … all in 31 days or less.
It’s a genuine evolution in momentum trading strategies. And tonight at 8 p.m., you’ll have the rare chance for a crash course on the Greed Gauge from Mike himself, revealing why this is the #1 tool to have in your kit for what lies ahead.
If you haven’t already signed up, click here and do so right now. We’re just hours away from the big event, and this is NOT one to miss.
Managing Editor, True Options Masters